The collision of global markets and social mood

Friday, June 27, 2014

Breadcrumbs, Shockwaves, Abenomics, And Norway Kicking It

Bravo, Abenomics. Japan's latest CPI, at 3.7%, is the highest in 24 years while household spending imploded 8% in May. Wages have dropped 23 consecutive months. Shinzo Abe calls this victory over deflation. Nothing could be further from the truth.

The Fed is headed down the exact same path.

Both the yen and the Nikkei have given up all their post-Fed gains. Keep an eye on the yen because it is still an enormous carry currency. It too looks like it's forming a bearish wedge. Perhaps one more high above USDJPY 105 sometime this year or next, but few realize the shockwaves that could come afterward.

Meanwhile, Norway has so much oil money that they don't know what to do with it. But at least Norwegians have jobs. Their unemployment rate came out this morning: 2.7%.

The wedge and the arc continue their stealth grudge match. Yesterday left some interesting bread crumbs. Today's stop is 1951.04. Above 1960.83 without a new low below 1944.69 opens the door to new highs IF 1944.69 then holds.

Price closed at the 78.6% Fibonacci level, so a trading range could develop. This could help the chances of a resolution higher. Also, price got to a lower low yesterday on lower volume. Another tell that suggests higher prices.

There are still lower targets, however. And it must be respected that the market could well be in the early stages of a wave 4 of the wedge scenario. In that case, the 1900 area would still be game. Even then, higher highs could still occur.

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